Tuesday, October 27, 2020
Landlords

UK landlords selling up properties even as rents at record levels

Landlords in the UK are planning to sell at least one of their properties, even as rents are at record levels, having increased by 2% in the last year, shows latest research by Rightmove

Landlords in the UK are planning to sell at least one of their properties, even as rents are at record levels, having increased by 2% in the last year.

The latest research by Rightmove shows that 24% of landlords are planning to sell at least one property from their current portfolio, 13% will be selling more than one and 11% report they wish to sell their entire portfolio.

The number of properties available for rent is now down 13% on the previous low recorded in the third quarter of 2015, and London is 24% down, show figures from the online real estate firm. This downturn is being largely blamed on section 24 mortgage interest relief restrictions significantly increasing costs for landlords and the tenant fees ban.

However, 30% of landlords are planning on expanding their portfolios as they still consider property to offer the best return on investment.

The average landlord in the survey owns and lets three properties and a quarter of landlord only own one property.

Rightmove commercial director and housing market analyst, Miles Shipside, said there are a number of forces at play in the current rental market, all leading to record rents for tenants and fewer homes to choose from, yet demand remains strong.

Shipside said that worryingly for tenants there are signs that the stock shortage may worsen if some landlords follow through with their plans to sell up, though an increase in plans for build to rent properties may help to fill some of the gap. The overall feeling among those landlords who are planning to exit the market is one of frustration with many telling that the tax changes mean it’s no longer financially attractive to keep their properties.

He said that early data seems to point to some of the income lost through the removal of tenant fees being passed on to the tenant in higher rents, but it should still work out cheaper than paying the upfront admin fees as long as stock doesn’t constrict and rents don’t rise too much. What is really needed now is more properties available to rent.

Rising rents may tempt some landlords back in, but momentum is currently to downsize portfolios in spite of the prospect of increasing yields.

Important:
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.

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